By Tiernan Ray

Shares of BlackBerry (BBRY) are down 22 cents, or 1.6%, at $13.76, as the Street continues to handicap the fiscal Q1 report due a week from today, before market open.

The Street is modeling $3.38 billion and $5 cents profit.

While today’s reports are skeptical of demand, they also point to upside for next week’s report.

Raymond James’s Tavis McCourt reiterates a Market Perform rating, projecting revenue of $3.7 billion for the quarter, and a 7 cents profit, based on shipments of 8 million BlackBerry devices, including 4 million BB10 devices, which he believes is ahead of consensus of 7.3 million units and 3.3 million BB10 units.

McCourt thinks sales may be running ahead of actual sell-through of the devices:

We forecast channel fill of ~470k to drive above-consensus units of 8 mln and BB10 units of 4 mln. However, we suspect sell-through trends might have been slower than expected this quarter especially given BES 10.1 was only launched at the BB Live Conference in May (meaning there has not been much enterprise upgrade for both Z10 and Q10).

McCourt also thinks paying subscribers are still defecting, with perhaps 3 million subscribers leaving this quarter:

Similar to McCourt, BMO Capital’s Tim Long reiterates an Underperform rating, and a $9 price target, writing that “We believe BBRY is building more channel inventory for BB 10 devices.”

Long is modeling sales of 6.5 million of the older BB7 units and 2.5 million of BB10-based devices, for revenue of $3.1 billion, though he hedges, writing “but the higher sell-in of BB 10 devices could make consensus attainable.”

Long writes that his “checks” suggest production continues apace for the newer models but that demand is “muted”:

Last quarter, we assumed 300k–400k of sell-through on 1M of sell- in for BB 10 devices. We believe May could have an even larger sell-in/sell- through discrepancy […] Our recent checks in Asia indicate that the supply chain has not slowed, yet our checks on sell-through remain muted. As a result, units and ASPs could beat expectations for the May quarter. We don’t expect that to last, however. We believe BBRY could lose more than the 2M subscribers that we forecast for the May quarter. More concerning, we have noticed a more rapid decline in ARPU at one emerging markets carrier, which we expect to pressure Service revenues. We do not expect a gross margin lift like last quarter, where hardware margins improved and lower amortization helped by 500 bp. We also expect to see flat to slightly negative cash flow from operations in the quarter.

Long thinks subscriber count may have dipped by 2 million in the quarter.

McCourt’s and Long’s notes are in contrast to a piece yesterday from Jefferies & Co.’s Peter Misek, who opined the results could blow away consensus numbers by a wide margin on continued. Evercore Partners’s Mark McKechnie, also suggested results could beat.

In case you missed it, Bloomberg‘s Hugo Millerwas on BloombergTV with Betty Liu this morning talking about the appeal of the Q10 handset’s physical QWERTY keyboard.

“Ultimately what may be the company’s salvation is the good-ol’ fashioned keyboard variety,” said Miller. “What they’ve taken is put high-power software, a whole new operating system, into what’s a pretty traditional familiar format. And that’s what the bankers, the lawyers, the original BlackBerry faithful really love. There are 76 million of them out there waiting to upgrade their phones.”

“The Q10′s only been out in the U.S. for a week, and the U.S. is still the largest market for them. That’s the one thing analysts are in agreement in is that the Q10 is selling well. The Z10, one day you read a bearish report, the next a bullish. But there does seem to be a consensus that the Q10 plays to the faithful, and will be a solid seller this quarter and probably next quarter, as long as those 76 million subscribers are upgrading their phones.”

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There are 26 comments

JUNE 21, 2013 12:48 P.M.

al wrote:

It doesn't look good for blackberry :( I mean miracle could happen next week, but seems like stock is gonna go down to single digit. Future is uncertain for this bb.

JUNE 21, 2013 12:52 P.M.

Anonymous wrote:

Give Blackberry a chance.

JUNE 21, 2013 12:55 P.M.

@Al wrote:

hmmmm..... you related to James, or just short the stock.

JUNE 21, 2013 12:55 P.M.

JT22 wrote:

I'd like to hear from Gus Papageorgiou of Scotia bank. He seems to be right on with his estimates. These other analysts have no idea.

JUNE 21, 2013 1:48 P.M.

Kris wrote:

Tiernan Ray
Thank you for reminding readers about yesterday"s positive look story at the bottom.

JUNE 21, 2013 2:10 P.M.

reality check wrote:

The world is strange these days. Products don't sell because of the quality now. They sell because people think they will sell. If you think blackberry lacks star power, think about which other company that owns only 3% market share that is close to this well known. Take such other company that owns 3% market share, overnight give them blackberry's brand recognition, and see what will happen. People are just too tied up with its past. Imagine this blackberry has only just started up, look at its financial statements, it's brand name, it's products, it's customer base, then when nobody is around and u can be honest with yourself, look in the mirror and ask yourself.. $9??? can u convince yourself?

JUNE 21, 2013 2:34 P.M.

freddysrevng wrote:

@ reality check.... now take that a step further - BlackBerry has "undeniably" the Qwerty keyboard smartphone "locked up" with the BlackBerry Q10. I was at my ATT store, this morning, and a few were sold while I was there - point being - there is a rather healthy segment of the smartphone industry which "tried" phones with touchscreen keyboards and are coming back to the BlackBerry because they "hated them".

So, in addition to, everything you said - you have a "Best of Breed Product" with the BlackBerry Q10 - which BTW - the BlackBerry rep who was at the ATT store today said is "Outselling the Samsung Galaxy S4 in many markets outside of the U.S."

Anecdote? To be sure, but that's all you are getting from these iTard analysts so what is the difference?

Q10.... Q5 Launching around the world... as we type...

JUNE 21, 2013 2:36 P.M.

Daniel wrote:

The sentiment some have plays into the hands of those stock manipulators that want the BlackBerry stock price to fall so many will profit at the expense of others who hold "long" positions. The bashers are plentiful and little good news comes out that makes much difference. If Blackberry does not do something soon to counter these negative articles they will see the stock in the single digits. Let us hope the earnings report is enough to allow some stock gain. The lack of statements from BlackBerry in response to these bogus articles is disturbing. They certainly leave investors to fight the fight for them.

JUNE 21, 2013 3:04 P.M.

nice wrote:

I hope the shorts can push it to $9. It's worth $20!!

JUNE 21, 2013 3:56 P.M.

outside the box wrote:

its sweet justice when naysayer wall street gets it wrong and shorts are fried. BTW shorts are not meanful investors of commerce etc. and have no redeeming value to society...but its legal.

JUNE 21, 2013 4:15 P.M.

Kurt Windibank wrote:

I have not seen such a controversial stock in a long a time. Investors are divided, analysts vary so widely its hard to sort it all out. Based on the fact Prem Watsa has over 50m million shares at an average price of 17 bucks and he has a target of 40 dollars i am siding with him on Blackberry. He has a great track record and when you look at the value of the "sum of pieces" in BB you can see that it is trading below that value right now. All of the current focus is hardware sales and that is what moves the stock in either direction. However, over the long haul we will start to see the value hidden now in BES 10 MDM, QNX Embedded systems, BBM (Channels and Money) and not to mention the best mobile OS on the market today. May be a few tough quarters before the stock can shake off the shorts....but i think eventually they do prove the naysayers wrong and emerge as a profitable investment for those who buy in today at these levels.

Tiernan...you'll run out of material when that happens!

JUNE 21, 2013 4:47 P.M.

MrToronto1 wrote:

We'll find out soon enough- in 7 days.

JUNE 21, 2013 4:48 P.M.

Dogberry wrote:

I have been following this company very closely for 5 years. In Dec 2013 I watched an analyst say that BB is over and is not worth more than what it can be sold for in pieces. Then I read another analyst report saying that the new phones were being returned faster than they were being sold. Then there were analysts saying that the phones weren't selling. You know now that several analysts are conceeding that the phones are selling better than previously predicted. The spin that they are trying to put on it now is that although the up coming release will beat the street, it will be short lived because the sales this quarter were do to the BB diehards and no one else. Suggesting that next quarter will return to market share loss. Time for the truth: Yes, the June 28 report will beat the street by a healthy margin. The following quarter will be even more robust! Why do I say this? The supply chain clearly indicates that the product is moving and NO, there is no giant inventory building up in Waterloo. We already know that there are several other products coming down the pipe that will be out in the next 12 months. We also know that there are currently tons of corporate and government clients preparing for the upgrade to BB10. The 5 is hitting shelves as we speak. The future for BB is NOT murky as some would have you believe. Everytime a BB10 is sold, that person shows it to their friends and then there are 5 more people that want one as they realize it is an excellent smart phone. Ask around, I have no touble finding people that have been disappointed with their iphone or android. These consumers are ripe for the picking. BB is currently undervalued by a significant margin and is definitely a buy and hold stock. The growth potential for this stock over the next two years is solid. Watch for the coming short squeeze. It will be a train wreck for some.

JUNE 21, 2013 6:07 P.M.

Don't fall for the lies wrote:

"We believe". Is that all these analysts can come up with?!

JUNE 22, 2013 1:40 A.M.

@ nice wrote:

Maybe in the minds of some it's worth $20 but that's purely theoretical. In reality it's worth whatever you can get for it at whatever time. Make sure the trend is your friend.

JUNE 22, 2013 1:42 A.M.

@ Don't believe... wrote:

You don't like the word believe? What words do you use re your impressions of the future?

JUNE 22, 2013 1:44 A.M.

@ Dogberry wrote:

You mean 2012. Hmm. Maybe you shouldn't trust yourself and what you synthesize. Eh.

JUNE 22, 2013 1:48 A.M.

@ outside the box wrote:

Dear dummy. You cannot have a real market without shorters. Shorting adds liquidity to markets or else you'd end up with unsellable stuff that's as good as worthless.

JUNE 22, 2013 1:51 A.M.

@ Daniel wrote:

I would argue the bulls like Misek are the real manipulators re BBRY. No ounce of skepticism.

JUNE 22, 2013 1:58 A.M.

@ JT22 wrote:

Gus gave numbers that meant his target was $50. Historically no one has ever been more incorrect than GP. When RIM was $148 Gus targeted the stock at $250 and that was several hours before the market closed and RIM gave the earnings report. After that. RIM never saw 148 again.

LOL

PS. Maybe this is why BBRY is giving the ER on the 28th before the market opens.

JUNE 22, 2013 2:08 A.M.

@ freddysrevng wrote:

"A few were sold". Thank you. Nuff said. BTW. Outsells the S4? Like where? Only place I can guess according to Google Trends is Nigeria. Maybe Canuckastan. Saudia Arabia. Pakistan. That's it. Banana Stan?

BTW. Freddy you and BB along with their anachronistic Q10, Z10, Q5, Z5 etc have cornered the gotty-gaudy realm. Cheers.

JUNE 22, 2013 12:47 P.M.

Big buck wrote:

No mention of the stock being shorted 38% . A SHORT SQUEEZE is going to HAPPEN the EPS .67-.73 the stock will BLAST up into the $22 or higher.IMHO

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.